Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., center, speaks during a Senate Energy and Natural Resources Committee hearing with John Hickenlooper, governor of Colorado, left to right, Ross Eisenberg, vice president of energy and resources policy at the National Association of Manufacturers, Frances Beinecke, president of the Natural Resources Defense Council, and Kenneth Medlock, senior director at the Center for Energy Studies, in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members of a Senate committee for energy split over expanding U.S. natural gas exports, mirroring a disagreement between fuel consumers such as Dow Chemical Co. and producers such as Exxon Mobil Corp. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Andrew Liveris; John Hickenlooper; Ross Eisenberg; Frances Beinecke; Kenneth Medlock less

Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., center, speaks during a Senate Energy and Natural Resources Committee hearing with John Hickenlooper, governor of Colorado, left to ... more

Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., right, looks on as John Hickenlooper, governor of Colorado, speaks during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members of a Senate committee for energy split over expanding U.S. natural gas exports, mirroring a disagreement between fuel consumers such as Dow Chemical Co. and producers such as Exxon Mobil Corp. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Andrew Liveris; John Hickenlooper less

Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., right, looks on as John Hickenlooper, governor of Colorado, speaks during a Senate Energy and Natural Resources Committee hearing in ... more

Photo: Andrew Harrer

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Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., speaks during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members of a Senate committee for energy split over expanding U.S. natural gas exports, mirroring a disagreement between fuel consumers such as Dow Chemical Co. and producers such as Exxon Mobil Corp. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Andrew Liveris less

Andrew Liveris, chairman and chief executive officer of Dow Chemical Co., speaks during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two ... more

Photo: Andrew Harrer

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Kenneth Medlock, senior director at the Center for Energy Studies, speaks during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members of a Senate committee for energy split over expanding U.S. natural gas exports, mirroring a disagreement between fuel consumers such as Dow Chemical Co. and producers such as Exxon Mobil Corp. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Kenneth Medlock less

Kenneth Medlock, senior director at the Center for Energy Studies, speaks during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members ... more

Photo: Andrew Harrer

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Ross Eisenberg, vice president of energy and resources policy at the National Association of Manufacturers, listens during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on Tuesday, Feb. 12, 2013. The top two members of a Senate committee for energy split over expanding U.S. natural gas exports, mirroring a disagreement between fuel consumers such as Dow Chemical Co. and producers such as Exxon Mobil Corp. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Ross Eisenberg less

Ross Eisenberg, vice president of energy and resources policy at the National Association of Manufacturers, listens during a Senate Energy and Natural Resources Committee hearing in Washington, D.C., U.S., on ... more

Photo: Andrew Harrer

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Senators plunge into debate over natural gas exports

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WASHINGTON - Senators grappled with the thorny issue of natural gas exports on Tuesday, as even self-proclaimed free-market enthusiasts questioned whether some federal limits are needed to constrain U.S. prices and give a boost to domestic manufacturing.

Sen. Ron Wyden, D-Ore., the chairman of the Energy and Natural Resources Committee that held a hearing on the issue, said his goal was to arrive at a "sweet spot where U.S. gas producers make enough money to continue producing and U.S. manufacturers have an affordable stable supply of natural gas."

Market forces would ensure that equilibrium, predicted Kenneth Medlock, senior director of the Center for Energy Studies at Rice University. Medlock cast the fears of excessive exports as overblown, considering the current global market for liquefied natural gas is around 30 billion cubic feet per day, roughly the same amount companies are seeking to export from the U.S.

"There is no way that if all of those licenses were approved you'd see 30 billion cubic feet per day of capacity" constructed in the U.S., Medlock said.

Other countries are ramping up production of natural gas, following the U.S. lead in using hydraulic fracturing and horizontal drilling to harvest fossil fuels from dense rock formations. The added cost of liquefying and shipping natural gas overseas also eventually could blunt international demand for American natural gas, which currently sells for about a third of the cost it commands in Asian markets.

Ross Eisenberg, vice president of energy and resources policy for the National Association of Manufacturers, said the money, lead time and regulatory approvals needed to build facilities to liquefy natural gas by cooling it to minus 260 degrees Fahrenheit also will constrain exports.

But Senate Democrats and Dow Chemical Co. CEO Andrew Liveris were skeptical. Noting that natural gas is used as "the first, indispensable ingredient for everything we make in this country," Liveris argued America's bounty is a "once-in-a-generation opportunity for America to export advanced products, not just BTUs."

In a hearing that dwelled on free trade fundamentals, Liveris said companies operate under "rules-based free trade." For U.S. regulators, he insisted, it's important we "be careful we look at this treasure and set the rules with Americans in mind."

Sen. Joe Manchin, D-W.Va., noted that he was a "free-market" proponent. "And yet, I'm concerned we're going to lose this opportunity of a generation."

Manchin suggested a hybrid approach, with foreign sales constrained to possibly 5 bcf/day for a decade to allow time for U.S. transportation and manufacturing demand to catch up with natural gas supply. Afterward, "all bets should be off," Manchin said.

Sen. Lamar Alexander, R-Tenn., said he was worried that linking U.S. natural gas prices and supplies to a world market indexed to the price of oil would jeopardize domestic manufacturing jobs, while hurting farmers and truckers.

"I see the enormous, incredible advantage the United States has at the moment from having a domestic price for natural gas. It's really a godsend," Alexander said. "I suspect it's a much bigger source of jobs than the production value of natural gas in the United States."

Sen. John Barrasso, R-Wyo., suggested that any limits on natural gas exports could be a slippery slope, inviting World Trade Organization challenges and prompting protectionist policies up and down the supply chain. If the U.S. curbs natural gas exports, couldn't we limit exports all along the supply chain, he asked. "Where do we draw the line?"